Instructions For Form 4626 - Alternative Minimum Tax-Corporations

•

A “running balance” of the excess of

Act of 1986, this rule applies to property

Specific Instructions

the corporation’s total increases in

placed in service after July 31, 1986.)

alternative minimum taxable income

What Depreciation Is Not

(AMTI) from prior year adjusted current

Line 1. Taxable Income

earnings (ACE) adjustments over the

Refigured for the AMT?

or (Loss) Before Net

total reductions in AMTI from prior year

Do not refigure depreciation for the

ACE adjustments (see the instructions

Operating Loss

AMT for the following.

for line 4d).

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Residential rental property placed in

Deduction

service after 1998.

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Short Period Return

Enter the corporation’s taxable income

Nonresidential real property with a

or (loss) before the NOL deduction,

class life of 27.5 years or more

If the corporation is filing for a period of

after the special deductions, and

(generally, a building and its structural

less than 12 months, AMTI must be

without regard to any excess inclusion

components) placed in service after

annualized and the tentative minimum

(for example, if filing Form 1120,

1998 that is depreciated for the regular

tax prorated based on the number of

subtract line 29b from line 28 of that

tax using the straight line method.

months in the short period. Complete

form).

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Other section 1250 property placed

Form 4626 as follows.

in service after 1998 that is depreciated

1. Complete lines 1 through 6 in the

Line 2. Adjustments and

for the regular tax using the straight line

normal manner. Subtract line 6 from

method.

Preferences

line 5 to figure AMTI for the short

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Property (other than section 1250

period, but do not enter it on line 7.

property) placed in service after 1998

To avoid duplication, do not

2. Multiply AMTI for the short period

that is depreciated for the regular tax

include any AMT adjustment or

by 12. Divide the result by the number

using the 150% declining balance

preference taken into account

of months in the short period. Enter this

CAUTION

method or the straight line method.

on line 2i, 2j, 2k, or 2o in the amounts

result on line 7 and write “Sec.

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Property for which the corporation

to be entered on any other line of this

443(d)(1)” on the dotted line to the left

elected to use the alternative

form.

of the entry space.

depreciation system (ADS) for the

3. Complete lines 8 through 11.

Line 2a. Depreciation of

regular tax.

4. Subtract line 11 from line 10.

•

Post-1986 Property

Any qualified property eligible for a

Multiply the result by the number of

special depreciation allowance if the

months in the short period and divide

What Adjustments Are Not

depreciable basis of the property for the

that result by 12. Enter the final result

AMT is the same as for the regular tax.

Included As Depreciation

on line 12 and write “Sec. 443(d)(2)” on

If the depreciable basis for the AMT is

Adjustments?

the dotted line to the left of the entry

the same as for the regular tax, no

space.

Do not make a depreciation adjustment

adjustment is required for any

on line 2a for:

5. Complete the rest of the form in

depreciation figured on the remaining

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A tax shelter farm activity. Take this

the normal manner.

basis of the qualified property.

adjustment into account on line 2i.

However, if an election is in effect to

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Passive activities. Take this

not have the special allowance apply,

adjustment into account on line 2j.

Allocating Differently

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the corporation must refigure

An activity for which the corporation

depreciation for the AMT.

Treated Items Between

is not at risk, or income or loss from a

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Any part of the cost of any property

partnership interest, or stock in an S

Certain Entities and

that the corporation elected to expense

corporation if the basis limitations

apply. Take this adjustment into

under section 179. The reduction to the

Their Investors

account on line 2k.

depreciable basis of section 179

For a regulated investment company, a

property by the amount of the section

What Depreciation Must Be

real estate investment trust, or a

179 expense deduction is the same for

Refigured for the AMT?

common trust fund, see section 59(d)

the regular tax and the AMT.

for details on allocating certain

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Generally, the corporation must refigure

Certain public utility property (if a

differently treated items between the

depreciation for the AMT, including

normalization method of accounting is

entity and its investors.

depreciation allocable to inventory

not used), motion picture films and

costs, for the following.

video tape, sound recordings, and

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Property placed in service after 1998

property that the corporation elects to

Optional Write-Off for

depreciated for the regular tax using

exclude from MACRS by using a

Certain Expenditures

the 200% declining balance method

depreciation method that is not based

(generally 3-, 5-, 7-, or 10-year property

on a term of years, such as the

There is no AMT adjustment for the

under the modified accelerated cost

unit-of-production method.

following items if the corporation elects

recovery system (MACRS)), except for

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Any qualified Indian reservation

to deduct them ratably over the period

qualified property eligible for the special

property. See section 168(j).

of time shown for the regular tax.

depreciation allowance.

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Any natural gas gathering line (as

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Section 1250 property placed in

Circulation expenditures (personal

defined in section 168(i)(17)) placed in

service after 1998 that is not

holding companies only) — 3 years.

service after April 11, 2005, the original

depreciated for the regular tax using

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Mining exploration and development

use of which begins with the

the straight line method.

costs — 10 years.

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corporation after April 11, 2005, and

Tangible property placed in service

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Intangible drilling costs — 60 months.

which is not under self-construction or

after 1986 and before 1999. (If the

subject to a binding contract in

transitional election was made under

See section 59(e) for more details.

section 203(a)(1)(B) of the Tax Reform

existence before April 12, 2005.

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Instructions For Form 4626 - Alternative Minimum Tax-Corporations - 2011 Page 2

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